Customs Amendment (Anti-dumping Improvements) Bill (No. 2) 2011

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Purpose

The purpose of the Customs Amendment (Anti-dumping Improvements) Bill (No. 2) 2011 (the Bill) is to amend the Customs Act 1901 (the Customs Act) to further implement the Government’s response to the Productivity Commission’s Report into Australia’s Anti-dumping and Countervailing System.

The Bill amends the Customs Act to:

introduce a new appeals process

allow for extensions of time in which to conduct investigations into anti-dumping practices and

establish the International Trade Remedies Forum.

Background

According to the Productivity Commission:

Dumping is said to occur when an overseas supplier exports a good to Australia at a price below its ‘normal value’ in the supplier’s home market. If dumping causes, or threatens to cause, ‘material injury’ to local producers of ‘like goods’, then remedial action—mainly the imposition of special customs duties—can be taken against the imported goods concerned.

Similarly, countervailing duties can be imposed on imports which benefit from any of a specified group of government subsidies and which cause or threaten material injury to a local industry producing like goods.[1]

The World Trade Organisation (WTO) is responsible for determining and administering internationally agreed principles and rules for managing dumping issues, as well as for providing a dispute settlement mechanism.

Two WTO agreements provide the basis for Australia’s anti-dumping system:

the Agreement on Implementation of Article VI of the General Tariffs and Trade 1994 (the Anti‑Dumping Agreement) prescribes rules for the conduct of anti-dumping investigations and the application of measures to address dumping, including how member countries may: initiate cases, calculate dumping margins, determine injury, enforce remedial measures and review past determinations and

the Agreement on Subsidies and Countervailing Measures (the Countervailing Measures Agreement), formally known as the Agreement on Subsidies and Countervailing Measures, regulates measures designed to remedy material injury caused by subsidised imports, along similar lines to the Anti-Dumping Agreement.[2]

The Customs Actand the Customs Tariff (Anti-Dumping) Act 1975 are the principal statutes relating to anti-dumping.[3]

In July 2011, the Government introduced the Customs Amendment (Anti-dumping) Improvements Bill 2011.[4] The reforms contained in that Bill reflected a growing interest by government and stakeholders in changing Australia’s existing anti-dumping scheme and were a direct response to the 2009 Productivity Commission report into Australia’s anti-dumping system.[5] The Productivity Commission report contained 20 separate recommendations for improving the anti-dumping system. The Government accepted 15 of those recommendations, either in whole, or in part.[6]

The first tranche of changes, contained in the Customs Amendment (Anti-dumping) Improvements Bill 2011, were directed towards:

improved decision making through clarifying the list of injury factors that can be claimed by domestic industry, and Customs’ approach to injury determinations

improved timeliness through introducing a 30 day time limit for Ministerial decisions on anti‐dumping cases and

better access to the anti‐dumping system through allowing Australian companies to combat a wider range of subsidies, and clarifying the parties who can participate in investigations to include relevant industry associations, unions and downstream industry.[7]

A detailed history of Australia’s anti-dumping legislation was set out in the relevant Bills Digest.[8]

At its meeting of 25 November 2011, the Senate Selection of Bills Committee determined that the Bill not be referred to any committee for inquiry and report.[9]

Financial implications

According to the Explanatory Memorandum:

The Australian Government has provided $10.4 million over the forward estimates to be absorbed by Australia’s Customs and Border Protection Service for the implementation of the June 2011 reforms to the anti-dumping system of which this Bill forms part. Funding of $0.7 million has been provided for the period 2012-13 to 2014-15 for the new appeals process as established in this Bill.[10]

Main issues

This Bill further implements the Government’s reforms to the anti-dumping regime commenced in the Customs Amendment (Anti-dumping Improvements) Act 2011. In particular, the new appeals process partly responds to Recommendations 7.1 and 7.2 of the Productivity Commission Report.[11] The extension of timeframes responds to Recommendation 7.3.[12]

A person who believes that dumped or subsided goods have caused, or threaten to cause, material injury to an Australian industry producing “like” goods can apply for the publication of a dumping or countervailing duty notice which can result in the imposition of measures.[13]

It is the role of the Chief Executive Officer of Customs and Border Protection Service (the CEO) to consider all such applications and to decide whether an investigation should occur.[14] In certain circumstances, such as where the CEO finds that the goods have not been dumped or subsidised, the CEO must reject the application.[15] Upon completing the investigation, the CEO reports to the Minister for Home Affairs (the Minister) who then decides whether anti-dumping and/or countervailing measures should be imposed or whether to accept price undertakings offered by overseas suppliers.[16]

In the event a party is unhappy with a decision made by either the CEO or the Minister, they have the option of appealing the decision to an external review officer, known as the Trade Measures Review Officer (the Review Officer).[17] While the Review Officer is external to the Australian Customs and Border Protection Services (Customs), he or she is not external to Government, as he or she is an officer in the Attorney-General’s Department. Upon reviewing the application, the Review Officer has different powers of review depending on who made the decision:

Where an appeal relates to a decision by the CEO of Customs — for example, to terminate an application or investigation — and the [Review Officer] reaches a different conclusion, it [sic] can substitute another decision. But where an appeal relates to a decision to impose or not impose anti-dumping duties, the [Review Officer] can only recommend to the Minister that Customs reinvestigate the finding(s) concerned. In reviewing decisions, the [Review Officer] may only take account of information available to Customs in the course of the original investigation.[18]

The Productivity Commission noted in its report that: ‘an appeal arrangement which simply leads to reinvestigation by the provider of the advice on which the decision was based cannot reasonably be regarded as robust or fair’.[19]

In discussing how this issue could be addressed, the Productivity Commission looked at a range of options, including allowing the Review Officer to substitute a decision made by the Minister; requiring the CEO to re‑investigate the matter on the basis that the findings in the original investigation that were successfully appealed were flawed; and requiring the Minister to make a final determination having regard to the findings of both the Review Officer and the CEO.[20]

In addition, the Productivity Commission examined whether the hearing of appeals should remain the responsibility of the Review Officer, or be allocated to another body, such as the Administrative Appeals Tribunal (AAT).[21] While the majority of stakeholders considered the Review Officer to be a cost-effective appeals mechanism, there were concerns raised that there should be a more robust arrangement in place.[22] In their joint submission to the Productivity Commission, the Law Council of Australia and the Law Institute of Victoria, while not commenting on the use of the Review Officer, recommended that:[23]

any further review(s)....be undertaken on the basis that the decision maker can substitute a new decision “on the merits” in a manner consistent with the reviews undertaken by the Administrative Appeals Tribunal.[24]

The concept of sending appeals relating to anti-dumping decisions to the AAT is also supported by other organisations.[25]

However, the Productivity Commission considered that the AAT would be an expensive and lengthy alternative to the current system.[26] It therefore recommended that the Minister, Review Officer and Customs retain their broad administrative and decision-making roles within the anti‑dumping system.[27] In improving the current process, the Productivity Commission felt that the best approach would be to require the Minister to make a final decision based on the original advice from the CEO and the advice from the Review Officer.[28] It also recommended that the Review Officer be given the power to recommend a reinvestigation by the CEO, having regard to specific matters.[29] This would apply to situations where the Review Officer found the CEO’s analysis and/or findings to be flawed, but did not have the information available to determine what the appropriate conclusion should be.[30] While the Review Officer would decide what specific matters should be covered by the reinvestigation, the Productivity Commission proposed that the CEO would continue to report to the Minister.[31]

The Government’s report on anti-dumping, which responded to the Productivity Commission Report, highlighted a number of concerns with the current review process.[32] These included the perception of bias with regard to the current process, where successful appeals to the Review Officer are then re-investigated by the CEO.[33] To address these concerns, the Government has chosen to significantly change the current review process:

the Review Officer will be replaced by a Review Panel consisting of at least three members, who will be responsible for reviewing decisions made by the Minister or CEO.[34] In his second reading speech, the Minister outlined the benefits of introducing a Panel, which included the Panel’s capacity to take on a greater work load; that members of the Panel will be appointed by the Minister based on their relevant expertise; and that the Panel would be independent of Government[35]

before making any recommendations to the Minister, the Review Panel will now be able to request that the CEO reinvestigate the matter and report back to the Review Panel[36] and

in making its recommendation to the Minister, the Review Panel will now have the power to recommend that the Minister’s original decision be revoked and a new decision substituted.[37]

Item 21 of Schedule 1 of the Bill repeals and replaces the heading to Division 8 of Part XVB of the Customs Act. This Division currently relates to the Review Officer, but the amendments proposed in the Bill will replace the Review Officer with a Review Panel.

Item 22 of Schedule 1 of the Bill repeals and replaces sections 269ZK–269ZT of the Customs Act to establish the new Review Panel, which will be responsible for reviewing decisions made by the Minister or the CEO.

The Review Panel is to consist of a Senior Member and at least two other members: proposed section 269ZM, with each member to be appointed, in writing, by the Minister: proposed subsection 269ZP(1). Importantly, the Minister must not appoint an officer of Customs as a member of the Review Panel and must be satisfied that the proposed member has the necessary qualifications, knowledge or experience: proposed subsections 269ZP(3) and 269ZP(4). Minimum standards of qualifications, knowledge or experience are not prescribed.

Members are to receive the same protection and immunity in the performance of their duties as a Justice of the High Court: proposed section 269ZO. Members are to be appointed on a part-time basis: proposed subsection 269ZP(2); and must not engage in any paid employment that conflicts with the performance of their duties: proposed section 269ZT. Under proposed section 269ZQ, the member holds office for the period specified in the instrument of appointment. Although that period must not exceed three years, the proposed provision does not limit the Minister’s power of reappointment.

Proposed section 269ZR states that the Minister is responsible for determining the terms and conditions of appointment of Review Panel Members. Members of the Review Panel are not public officials for the purpose of the Remuneration Tribunal Act 1973, which means that the Tribunal does not have a role in monitoring what remuneration Review Panel Members are entitled to: proposed subsection 269ZR(2). The Minister may terminate the appointment of a member of the Review Panel for misbehaviour or physical or mental incapacity: proposed subsection 269ZTB(1). In addition, the Minister may terminate the appointment of a member in prescribed circumstances, including but not limited to, the bankruptcy of the member, where the member engages in paid employment that conflicts with the proper performance of the member’s duties, or where the member fails without a reasonable excuse to disclose a direct or indirect pecuniary interest that conflicts or could conflict with the proper performance of his or her functions: proposed section 269ZTB. Under proposed section 269ZTD, the Minister is responsible for ensuring that sufficient resources, including staff, are made available to the Review Panel.

Items 27-103 of Schedule 1 of the Bill set out the procedures that the Review Panel must comply with when reviewing decisions. Item 28 of Schedule 1 of the Bill repeals and replaces section 269ZW of the Customs Act to amend the outline of Division 9 of Part XVB of the Customs Act. Division 9, which provides for the review of decisions by the Review Panel, consists of Subdivisions A–D. Subdivision B sets out the steps for review of a Ministerial decision whilst Subdivision C sets out the steps for review of decisions made by the CEO. Proposed section 269ZYA of the Customs Act, to be inserted by item 31 of Schedule 1 of the Bill, allows for a single member of the Review Panel to conduct reviews under both subdivisions B and C.

Items 36–73 of Schedule 1 of the Bill amend subdivision B of Division 9 of Part XVB of the Customs Act. While the majority of the amendments are consequential in nature, there are a number of changes to the current review process. At present, the Review Officer, upon completing their review, must make a recommendation to the Minister.[38] He or she can only recommend that the Minister’s original decision be upheld, or that the Minister direct the CEO to reinvestigate their findings.[39] The Minister then has the discretion as to whether to adopt the Review Officer’s recommendation.[40] The diagram at Appendix 2 of this Bills Digest outlines the current appeals process.[41]

Under proposed section 269ZZL of the Customs Act, at item 66 of Schedule 1 of the Bill, the Review Panel may require the CEO to reinvestigate the matter before making any recommendation to the Minister. The CEO must conduct the re-investigation in accordance with the Review Panel’s requirements and a report must be provided within the period specified by the Review Panel: proposed subsection 269ZZL(2).[42]

Item 55 of Schedule 1 of the Bill, which repeals and replaces paragraph 269ZZK(1)(b) of the Customs Act, allows the Review Panel wider scope in making recommendations to the Minister. While the Review Officer only had the power to recommend that the Minister’s original decision be affirmed, the Review Panel will also be able to recommend that the Minister revoke the reviewable decision and substitute a specified new decision. Under item 68 of Schedule 1 of the Bill, which amends subsection 269ZZM(1) of the Customs Act, the Minister still has the discretion to accept, or reject, any recommendations made by the Review Panel. In the event the Minister decides to change their original decision, he or she may make a new decision that differs from the decision recommended by the Review Panel.[43]Item 41 of Schedule 1 of the Bill repeals and replaces section 269ZZB of the Customs Act to insert a new diagram setting out the steps to be followed under the new appeals process, which is reproduced at Appendix 3 of this Bills Digest.

There are a number of other changes to the appeal process:

Item 53 of Schedule 1 of the Bill repeals and replaces section 269ZZJ of the Customs Act, which sets out which parties are able to make submissions to the Review Panel in relation to a review of a decision. Trade unions and those that use the subject goods in the production and manufacture of other goods will now be allowed to make submissions.

Items 37 of Schedule 1 of the Bill amends subsection 269ZZA(1) of the Customs Act to expand the definition of reviewable decisions to include decisions regarding continuation, variation or revocation of anti-dumping measures.

Item 45 of Schedule 1 of the Bill amends paragraphs 269ZZE(2)(b) and (c) of the Customs Act to modify what information a party applying to the Review Panel for a review of a decision needs to include on their application. Under the current paragraphs 269ZZE(2)(b) and (c), an applicant needs to specify the Minister’s findings and particularise what grounds will warrant an investigation in respect of these findings. In the event the applicant is unable to establish that there are reasonable grounds to warrant an investigation, the Review Officer must reject their application.[44] Under new paragraph 269ZZE(2)(b), the applicant must ensure that their application contains a statement that sets out their reasons for believing that the decision given by the Minister is not the correct or preferable decision.[45]Item 47 of Schedule 1 of the Bill, which repeals and replaces current sections 269ZZF and 269ZZG of the Customs Act, allows the Review Panel to choose whether to reject the applicant’s application where it is not satisfied that the applicant has provided information setting out reasonable grounds for the decision not being the correct or preferable decision.[46]

While the Government adopted the recommendations of the Productivity Commission only in part, it appears to have gone further than the Commission’s recommendations in some respects, including by establishing the Review Panel, with its enhanced powers relating to the investigation and ability to determine cases in a more independent, flexible and cost effective manner.

As noted above the Review Panel will have the power to require the CEO to reinvestigate decisions and report back to the Review Panel rather than the Minister. In making its recommendation to the Minister, the Review Panel will have the power to recommend that the Minister’s original decision be revoked and a new decision substituted. Although these proposed changes do not replicate the role of the AAT in conducting merits review, they appear to address, to some extent, the views of the Law Council of Australia and the Law Institute of Victoria to the Commission regarding the need for merits review.

Currently the CEO has one of the shortest timeframes in the world in which to investigate anti‑dumping practices.[47] The CEO has a time limit of 155 days in which to conduct his or her investigation, and is only allowed to request one extension of time, this request being required to be made before day 110 of the investigation.[48]

In their report, the Productivity Commission noted that: ‘over the past decade, Customs has completed only around 40 per cent of investigations within the 155-day timeframe, with the average extension on the remainder being close to 60 days’.[49] These statistics indicate that the current practice is for the CEO to request a lengthy extension before the cut-off point at 110 days, in case an extension is needed later and there is no longer any avenue for one to be sought.[50] In their submission to the Commission, the Law Council of Australia and the Law Institute of Victoria noted that ‘the reality is that on a number of occasions, the 155 day deadline is extended due to difficulties in securing evidence, especially in complex matters’.[51] The Productivity Commission also commented that ‘timeframes that necessitate frequent appeals for extensions are in many respects tokenistic and can create unrealistic expectations which can be hard to manage’.[52] While the Productivity Commission discussed increasing the overall timeframe from 155 days, the preferred approach was to allow the CEO to have more flexibility in requesting extensions of time.[53] The Productivity Commission therefore recommended that provision be made for the CEO to be able to seek extensions at any point during the investigation process.[54] In accepting the recommendation of the Productivity Commission, the Government has stated that ‘the amendment is intended to provide for a number of smaller, targeted extensions so that, overall, where extensions are necessary the timeframe for an investigation is extended for as short a time as possible’.[55] The Explanatory Memorandum also notes that these changes will allow for Customs ‘to undertake robust analysis where investigations involve particularly complex arrangements, or involve large numbers of countries or interested parties’.[56]

At present, the CEO is able to apply only once to the Minister to extend the timeframe of an investigation period.[57] This application must occur before day 110 of the investigation period.[58]

Item 20 of Schedule 1 of the Bill repeals and replaces section 269ZHI to allow the CEO to apply for one or more extensions of time at any point during an investigation, review of measures, continuation inquiry or duty assessment. The CEO must give reasons for each request, and the Minister may grant more than one extension provided he or she is satisfied that it is reasonable to do so.[59]Items 5, 7, 8 and 13-19 consequentially amend the Customs Act to implement these changes.

In making its recommendation, the Productivity Commission highlighted the need for the actual length of time in which investigations were being conducted to be publically reported.[60] The Productivity Commission also recommended that all correspondence relating to requests for extensions of time be made available on the public file.[61] The Minister has said that ‘implementation of this proposal will be carefully monitored to ensure it does not result in a blow out of investigation periods, and that extensions are only sought in complex cases, not routinely’.[62] In its response to the Productivity Commission’s report, the Government stated that, ’the Branch will continue to provide in its annual report a consolidated summary of the timeliness of each of its investigations in the preceding 12 months’.[63]

In his second reading speech the Minister clearly set out the Government’s rationale in establishing the International Trade Remedies Forum (the Forum):

The Government has established the International Trade Remedies Forum to provide strategic advice and feedback on the implementation of the reforms, the ongoing operations of the anti‑dumping system as well as reporting to Government on opportunities for further improvements.[64]

It appears that the Government’s purpose in establishing the Forum is to ensure that there is a body in place where stakeholders and industry representatives can comment on the effectiveness of Australia’s anti-dumping system.

Item 104 of Schedule 1 of the Bill inserts proposed Part XVC into the Customs Act, to establish the Forum, its functions, mode of operation and appointment of members. Under proposed section 269ZZYC of the Customs Act, the Forum is responsible for advising the Minister on the effectiveness of Australia’s current anti-dumping legislation, and what improvements can be made.[65]

The Forum is to be headed by the CEO, who is to preside over all meetings at which he or she is present: proposed subsection 269ZZYG(3) of the Customs Act. The remaining members of the Forum are to be appointed by the Minister and will consist of the following:

11 members representing Australian producers, manufacturers, industry bodies and importers[66]

four members who represent Australian trade unions

such number of members to represent the Commonwealth as the Minister thinks fit and

The Forum must meet at least two times a year and the CEO may convene a meeting at any time: proposed subsections 269ZZYG(1) and 269ZZYG(2).

Appendix 1

Recommendations made by the Productivity Commission, which are addressed in the Bill:

Recommendation 7.1

The Australian Customs and Border Protection Service, the Minister and the Trade Measures Review Officer should retain their broad administrative and decision-making roles within the anti-dumping system, with their specific responsibilities modified, as appropriate, to reflect the Commission’s other recommendations.

These roles and responsibilities should be reconsidered at the time of the next review (see Recommendation 7.11) in the light of experience with the new system.

Recommendation 7.2

The following changes should be made to the current appeals arrangements for anti-dumping decisions:

decisions on whether or not to commence an investigation into the continuation of anti-dumping or countervailing measures beyond the initial five-year term — and any ensuing decisions by the Minister — should be appellable and

where the Trade Measures Review Officer (TMRO) finds in favour of an appeal against a decision made by the Minister, the Minister should make a final determination without returning the case to the Australian Customs and Border Protection Service (ACBPS) for reinvestigation, unless the TMRO explicitly recommends a reinvestigation. In the event of the latter:

– the reinvestigation and report to the Minister should be conditioned and constrained by a directive from the TMRO on where the initial investigation was flawed and
– within the confines of that directive, there should be scope for the ACBPS to consider relevant new information.

Any such reinvestigations and ensuing decisions by the Minister should not be appellable.

Recommendation 7.3

Provision should be made for the Australian Customs and Border Protection Service (ACBPS) to seek extensions of the investigation period at any time during an investigation. In addition to notification of extensions through the issue of an Australian Customs Dumping Notice, all correspondence relating to such requests should be made available on the public file.

This new arrangement, together with the adequacy of the general time limits for the various steps in the investigation process, should be assessed at the next review (see Recommendation 7.11), having regard to experience in the intervening period under the new system.

Through its ‘Anti-Dumping and Countervailing Actions — Status Reports’, the ACBPS should provide an annual, consolidated, summary of the timeliness of each of its investigations in the preceding 12 month period.

[22]. The Commission concurred that the current appeal arrangements are not sufficiently robust, ibid., pp. 136-137.

[23]. Law Council of Australia and Law Institute of Victoria, Joint Submission to the Productivity Commission, Inquiry into Australia’s Anti-dumping and Countervailing Duty System, 1 July 2009, p. 21, viewed 21 February 2012,

[24]. In hearing appeals, the AAT has the power to review the merits of the action, including the finding of fact and policies upon which the decision is based: PH Butt and D Hamer, eds, LexisNexis Concise Australian Legal Dictionary, 4th edn., LexisNexis Butterworths, Chatswood, 2011, pp. 377-378. Under subsection 43(1) of the Administrative Appeals Tribunal Act 1975, the Tribunal has the power to set aside the decision under review and substitute its own decision, unlike the Review Officer who can only review decisions made by the Minister. In their submission, the Law Council of Australia and the Law Institute of Victoria also commented on the fact that any decisions that were reviewed by the Review Officer were then subject to reinvestigation by Customs: Law Council of Australia and Law Institute of Victoria, Joint Submission to the Productivity Commission, Inquiry into Australia’s Anti-dumping and Countervailing Duty System, op. cit., p. 21.

[27]. Ibid., pp. 134-135; this included the recommendation that the Minister remain the ultimate decision maker, with the Review Officer not being empowered to substitute his or her decision for a decision made by the Minister.

[32]. Australian Customs and Border Protection Service (ACBPS), Streamlining Australia’s anti-dumping system: an effective anti-dumping and countervailing system for Australia, ACBPS, Canberra, June 2011, viewed 5 February 2012,

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